The Ethical Barometer

The flags are always there, hindsight being what it is.  But, perhaps we could document these flags after the crash and use them proactively.  Harry Markopolos warned us about Madoff being a fraud in a detailed November 2005 white paper.  Mr. Markopolos found 29 red flags in the Madoff operations that he tried to convey to the SEC from 1999 on, but we are trigger shy when it comes to iconic figures.  Icons know that.  Throw down the flag anyway.  What are the flags?  Well, any time folks tell you that their trading strategies are proprietary . . . (in the words of the Monty Python boys) Run away!  And when a firm dispenses with the usual profit-sharing relationship of a hedge fund in favor of commissions (as earned by the firm doing your investing!) . . . Run away!  Continue reading →

Wells Fargo called off an employee conference scheduled to convene in Las Vegas.  President Obama scolded executives, “You can’t take a trip to Las Vegas . . . on the taxpayers’ dime.”  The outrage from Oscar Goldman, Hizzoner of the rose of the desert, centered on how his city is a place for serious business meetings.  Well, the billboards and side panels on the buses there signal otherwise. Then again, Mr. Goldman has never been known for seeing issues clearly.  The critical point is that for every canceled convention, meeting, or retreat, there is a hotel, acoustics firm, caterer, and on and on that lose contracts and payment.  For every limit on executive pay, there is one less boat purchased, one more vacation postponed, and more downturn.  Continue reading →

In this era in which outrage is a lost art and parents rent buses to haul their underage drinking high-schoolers around on prom night to help them avoid DUIs or worse, Kellogg Co. and USA Swimming deserve kudos, accolades, and a goodly (and the Barometer does mean goodly) share of our breakfast cereal business.  Kellogg, along with the board of USA Swimming, looked at the photos of Michael Phelps and his bong and said, “Enough!”  Mr. Phelps is no longer part of the Kellogg family.  And for three months, Mr. Phelps may not compete and has had his training grant suspended. Said Kellogg, “Michael’s most recent behavior is not consistent with the image of Continue reading →

The Barometer notes that commentary on the recent run of tax-challenged nominees for presidential-level appointments bemoans the vetting process of the Obama administration.  You can only vet so far.  If, as in the case of Mr. Daschle, the nominees withhold info from you, there isn’t much vetting can do.  Some trust in your nominees’ candor is important.  Therein lies the issue.  When you hold a presidential record on nominees’ problems, you need some introspection.  Perhaps the nominees, consummate Washington insiders who play by sandbox rules and not the basics of right and wrong, are problematic.  The hard truth is these nominees were not the best, in either qualfications or personal standards.  The administration needs a little dissent in the ranks.  Dissent is necessary in all management tasks, especially in hiring, whether presidential or front-line.  Good judgment in selecting hires makes the vetting rote.